Every year, Industry loses hundreds of thousands of dollars from subsidizing tenants in city-owned housing, including four of the five council members.

On Thursday, Industry’s City Council agreed to spend nearly $500,000 more to renovate two homes, with the bids calling for expensive quartz counter tops and 60-inch fire places. The improvements cost the equivalent of 29 years of rent for the properties, based on rents of $700 a month, the highest amount currently imposed on any of Industry’s tenants.

But Industry officials say there’s a dire need for the work, after years of deferred maintenance left both properties uninhabitable.

One contained so much mold the growth stretched from inside to the exterior. The other, where a past remodel began but wasn’t finished, has been used as an office for a rodeo for years, according to Alex Gonzalez, director of Development Services and Administration.

“We have a property, we need to bring it to code, otherwise it will sit there vacant,” Gonzalez said.

Gonzalez said the City Council will have to decide separately at a later date to transfer the properties to the city’s housing agency. The city does not know yet if the properties will be rented or for how much, he said. Industry hired former Attorney General Bill Lockyer earlier this year to help reform their housing.

Lockyer said Wednesday he supports adding new housing and charging market rates. He declined to comment on the cost of the renovations.

City Councilman Newell Ruggles cast the only no vote against the more expensive of the two renovations. That renovation, to convert a house used as an office back into a residence, is expected to cost $359,106.

“It seems like you could build a whole ‘nother house for that money,” Ruggles said. With the city charging such low rents, the cost “doesn’t make sense,” he added.

Mayor Mark Radecki said he sees the cost as an investment that will ensure the city does not need to renovate again for years.

Radecki recused himself on the second vote because of the proximity to the home to his own residence, but Ruggles voted in favor of the renovations after staff said they would review the price to see if they could cut costs by using less expensive materials.

Industry is using capital improvement funds for remodels rather than the revenue generated from rent, Gonzalez said. The cost of rent was not factored into the decision to renovate, as the city has to maintain the assets, he said.

The budgets for the projects surpass the last two years of revenue combined for the Industry Housing and Property Management Authority, which brought in $219,700 in 2014 and $220,010 in 2015. The authority is expected to generate even less this year, according to the city’s budget.

Industry’s housing program outspends its revenues every year because of significantly below market rate rents. The city charges at most $700 a month for rent, including for three-bedroom homes in a gated community overlooking a golf course.

One of the homes being renovated was lived in by the director of the golf course until the city evicted him last year.

Real estate experts have said the properties would go for double or triple on the open market. But Industry rents them primarily to city officials, their friends and family members through a program that doesn’t require any proof of income or a paper application.

Last year, Industry barred city employees from living in the homes, but the ban doesn’t include elected or appointed officials, who would likely be unable to find other residences within the city limits.

Previously, tax experts said the city may owe millions in back taxes because the value of the discounted rent should be taxed.

Jason Henry is an investigative reporter with the Southern California News Group. Raised in Ohio, Jason began his career at a suburban daily near Cleveland before moving to California in 2013. He is a self-identified technophile, data nerd and wannabe drone pilot.